French business activity slows to four-month low in February: PMI

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A general view shows the Eiffel Tower and the financial and business district in La Defense, west of Paris, France November 22, 2017. REUTERS/Gonzalo Fuentes

PARIS, (Reuters) - French business activity softened more than first thought in February, growing at the slowest pace in four months, although companies kept up hiring, a monthly survey showed on Monday.

Data compiler IHS Markit said its composite purchasing managers index fell last month to 57.3 from 59.6 in January, down from a preliminary reading of 57.8.

Nonetheless, the index remained comfortably above the 50-point threshold dividing an expansion in activity from a contraction although growth was the weakest since October.

Although output eased, corporate confidence rose to its highest point since September and business kept adding to staff as they struggled to keep up with growing backlogs of work

IHS Markit’s PMI index for the dominant service sector fell to 57.4 from 59.2 in January, down from a preliminary reading of 57.9.

“Private sector growth in France shifted down a gear in February with the headline composite output PMI highlighting the weakest expansion in five months amid a softer rise in client demand,” IHS Markit economist Alex Gill said.

“Nevertheless, the rate of increase remained substantially greater than the long-run average and consistent with a historically strong rise in GDP,” he added.

With business confidence firm, the economy grew 0.6 percent in the last three months of 2017 from the previous quarter, a rate IHS Markit economists expect it to match in the first quarter.